Journal
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
Volume 24, Issue 4, Pages 891-905Publisher
WILEY
DOI: 10.1111/itor.12313
Keywords
bounded rationality; quick response system; fashion apparel; inventory planning
Funding
- Research Grants Council of Hong Kong [PolyU5421-12H]
Ask authors/readers for more resources
In fashion retailing, inventory decisions are usually made by a human manager who is not necessarily perfectly rational. In this situation, the inventory decisions made may not always be optimal. At the same time, with advances in technology, fashion retailers have access to the latest market information and can implement the quick response (QR) system that is very helpful to systematically deal with market disruptions. In this paper, we explore the value of QR with the consideration of a boundedly rational human manager in the fashion retailing company. We show that for both cases, with and without QR, the human retail manager's level of bounded rationality significantly hurts the expected profits of the retailer and supply chain, but it does not hurt the manufacturer's expected profit. In addition, for both cases, with and without QR, we indicate how a minimum ordering quantity (MOQ) measure can be imposed by the manufacturer on the retailer, so that the manufacturer can benefit (in terms of expected profit) from the retailer's bounded rationality behavior. We further prove that if the manufacturer sets the MOQ to be the same as the retailer's theoretical optimal ordering quantity, the manufacturer will enjoy a higher profit with 50% chance, if the retailer is boundedly rational.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available